The ASEAN IPR SME Helpdesk takes a look ahead towards the ASEAN Economic Community (AEC) in 2015. Is this the beginning of a new era for foreign companies in Southeast Asia or business as usual?

At the Helpdesk it is not uncommon to encounter confusion or lack of recognition of the ‘ASEAN’ acronym that groups the major Southeast Asian countries. Not surprising really, given that there have been few memorable ASEAN initiated changes that have directly affected foreign businesses over its near 50-year history. Until now, for most it has stood for more on paper as a political union, over any great effects on international commerce.

However, this is set to change next year as the AEC officially comes into being.

In some ways similar to the economic unity of the EU, the broad aims of the AEC are to develop (1) a single market and production base, (2) a region of more equitable economic development, and (3) a globally integrated economic region. To achieve these, trade barriers will be removed or reduced and standards across a number of sectors (i.e. cosmetics, pharmaceuticals, agricultural products, and medical devices) will be harmonised.

Preparing for this level of economic integration has been no simple task, not least in terms of IPR, which has been the focus of five strategic goals for the 2011-2015 period:

1. A balanced IP system that accommodates varying levels of development of member states, including IP institutions, to make the region favourable to IP holders and creators.
2. Development of national or regional legal and policy infrastructures that can deal with an ever-changing IP landscape and enable ASEAN states to participate in global IP systems.
3. Systematic promotion of IP creation, awareness and utilisation, so that IP becomes a tool for innovation and development.
4. Active regional participation in the international IP community, to develop the capacity of member states and to address the needs of stakeholders in the region.
5. Intensified co-operation among member states and increased levels of collaboration to enhance the human and institutional capacity of IP Offices in the region.

There are, of course, still concerns over whether every member state can bring their IP institutions up to the required standards by next year.

The implications for IP rights holders

Any business operating in ASEAN that possesses IP assets should be aware that the AEC will likely make IP protection all the more vital. ASEAN will not go as far as the EU towards unlimited free movement of goods, but there will still be a significant increase in the movement of all types of goods within ASEAN, as well those entering member states.

In theory, IP protection should be self-regulating: with the freer movement of capital and investment as a target, investment may not follow if protection is weak in a certain country. In reality a lag in the development of IP institutions should be anticipated and there are some key issues concerning the region’s IP systems to keep in mind.

An important point is that there are currently no plans to introduce a ‘Community Trade Mark’ or regional patent to the AEC. Consequently, an IP rights holder needs to register in each country in which they seek protection. Additionally, it is advisable to consider individual trade secret and copyright laws, as it may be possible to record these at a national level.

Also, the AEC ‘Single Window’ for Customs means that, as in the EU, foreign goods will enter the AEC market via one Customs entry point, and are then free to circulate around the AEC with no additional border checks. This means that your goods are now far more likely to be sold in an AEC country you had not previously anticipated or intended.

The risk of counterfeiting exists across all of ASEAN. Thailand, Vietnam and Indonesia are a major source of, and destination for counterfeits, though the majority of counterfeit goods are still imported from China. Singapore is a small market for counterfeits, but as a large port receiving many goods from China, it serves as an entry- and transit-point for counterfeits.

Basically, businesses should not assume that the risks to their IP assets are reduced by the measures being brought in under the AEC – diligence and a sound protection strategy remain of utmost importance.

The Helpdesk will soon be releasing a guide, “Intellectual Property and the ASEAN Economic Community in 2015”, to give a clear, practical SME-orientated outline of the IP environment under the AEC. Check the ASEAN IPR SME Helpdesk website for details.